Friday, November 09, 2012

Utilities Face Scrutiny and Legal Battles Due to Long Electric Service Restoration Times After Hurricane Sandy

When electric service lost due to Hurricane Sandy is restored, there will probably be a major investigation by the Public Service Commission into pre-storm preparation, communications during the outages, the timeliness of repairs, and other issues

With customers lacking electric service for ten days now, and no end in sight for some, lawsuits seeking damages for customers are also on the way.  See Nik Bonopartis, Tarrytown lawyer sues Con Edison over storm troubles, Newsday, Nov. 8, 2012.

Utility tariffs approved by the Public Service Commission generally exculpate the utility for damages proximately caused by ordinary negligence in the provision of service.  For example, Con Edison tariffs provide:

The Company will endeavor at all times to provide a regular and uninterrupted supply of service, but in case the supply of service shall be interrupted or irregular or defective or fail from causes beyond its control or through ordinary negligence of employees, servants or agents the Company will not be liable therefor.The Company may, without liability therefor, interrupt service to any Customer or Customers in the event of emergency threatening the integrity of its system, if, in its sole judgment, such action will prevent or alleviate the emergency condition.

As discussed below, Con Edison tariffs do allow for some compensation to customers for spoiled food and medicine due to power outages, but the utility is interpreting its tariff so as to deny reimbursement.

On the other hand, even though insulated from ordinary negligence liability, utilities may face potential liability if "gross negligence" of the utility causes damage to customers.

After the 1977 New York City blackout, a jury found Con Edison liable for damages caused by an outage that occurred as a result of the utility's gross negligence, and the verdict was upheld by the state's highest court in  Food Pageant v. Consolidated Edison .  In that case, the state Court of Appeals  found support in the record upon which the jury could find gross negligence when Con Edison had not shed load at a critical point when the system was vulnerable due to a lightning strike that had put out transmission lines and due to the lack of emergency power available. The court held that the question of whether gross negligence existed was one for the jury to determine, and expert evidence was not required.  Also, the City of New York won damages in Koch v. Consolidated Edison . Although gross negligence requires proof of more than ordinary negligence, a lesson of these cases may be that juries and courts expect a utility to exercise a very high level of care in the operation of its system.

When an outage is "attributable" to a malfunction of Con Edison lines or cables, customers may be able recover some losses without suing the utility and without the need to prove gross negligence.  Compensation for food and medicine spoiled due to the lack of refrigeration due to the outage, is also available under current Con Edison tariiffs which provide for customer compensation. Residential Con Edison customers may file a claim, up to a maximum of $450, for actual losses of food spoiled due to lack of refrigeration, and for the actual cost of medicines spoiled by lack of refrigeration. Commercial Con Edison customers such as food stores may claim up to $9,000 in compensation for food spoiled due to lack of refrigeration due to an outage.

Con Edison, however, is taking the position that its tariff allowing compensation due to outages does not apply to those related to hurricane Sandy.  This interpretation of the tariff has not been ruled on by the New York Public Service Commission.

Customers who apply for reimbursement are likely to be denied.  A denial is reviewable by the PSC under its complaint handling rules. In such matters, the burden of proof is on the utility to show that its denial of reimbursement was proper.

Claim information is here.
Residential claim forms are here.
Commercial claim forms are here.
PSC Complaint Handling Procedure is here.********************************

Mark Harrington, Class Action Suit Filed Against LIPA, Newsday, Nov. 13, 2012 ("The suit, filed Tuesday [Nov. 12, 2012] in State Supreme Court in Mineola, charges LIPA and National Grid "grossly neglected vital maintenance," failed to fortify its substations, delayed replacing its outage management system, provided false information to ratepayers, and ignored a 2006 study that identified problems and could have minimized outages.").

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